Has anyone had issues with their employer FSA administrator not processing reimbursements quickly? My daycare costs are due at the beginning of the month, but my FSA takes 3-4 weeks to reimburse me, creating a cash flow problem.

This is such a common confusion point! I went through the same thing last year and here's what I learned from my CPA: The key thing to remember is that you CAN use both benefits, but you cannot claim the same expenses twice. So with your $21,000 in childcare costs: 1. Use your $5,000 FSA first (this saves you taxes on that $5,000 based on your tax bracket) 2. You have $16,000 remaining expenses 3. For 2025, you can claim up to $3,000 of those remaining expenses for the Child and Dependent Care Credit (since you have one child) 4. The credit percentage depends on your AGI - it ranges from 20% to 35% So you'd get the tax savings from the FSA PLUS a credit of 20-35% on up to $3,000 of additional expenses. This is definitely not double dipping - it's exactly how the system is designed to work. One tip: make sure you keep detailed records of all your childcare payments and your provider's tax ID number. You'll need this for Form 2441 when you file. Also, some states have their own childcare credits that might stack on top of these federal benefits, so it's worth checking your state's rules too.

This has been an incredibly thorough discussion that covers most of the key issues with S-Corp inventory donations. As someone who works with S-Corps regularly, I wanted to add a few additional considerations that might be helpful: First, make sure to coordinate with your bookkeeper or accountant BEFORE making the donation to ensure your inventory tracking system can properly handle the transaction. You'll need to be able to clearly identify which specific inventory items were donated and their exact basis amounts. Second, consider the cash flow implications. While you get a tax deduction, you're also giving away inventory that could have been converted to cash through sales. Make sure this aligns with your business's cash flow needs, especially if you're in a seasonal business or facing any liquidity concerns. Finally, document everything extensively. Beyond the standard charitable acknowledgment letter, keep detailed records of the inventory donated (descriptions, quantities, basis calculations), photos of the items, and any communications with the charity. The IRS can be particularly scrutinous of large non-cash donations, and having comprehensive documentation will protect you if you're ever audited. The interplay between the COGS adjustment, pass-through taxation, and individual shareholder limitations makes this more complex than a simple cash donation, but it can still be very beneficial when done correctly. Just make sure to run all the numbers first and communicate clearly with all shareholders about the tax implications they'll see on their personal returns.

Great question about the photo documentation! The IRS doesn't explicitly require photos for inventory donations, but they're incredibly valuable for audit protection, especially for donations over $5,000. During an audit, the IRS may question the condition and actual value of donated items, and photos provide concrete evidence of what was donated and its condition at the time of donation. I learned this lesson when helping a client who got audited on a large inventory donation. The IRS agent specifically asked for visual proof that the donated items were in the condition claimed on the Form 8283. Without photos, it became a very difficult conversation about fair market value and whether the items were truly usable by the charity. Beyond audit protection, photos also help with your own record-keeping. When you're donating large quantities of varied inventory, it's easy to lose track of exactly what was included months later when you're preparing tax documents. One more practical tip: if you do take photos, make sure they clearly show any identifying marks, serial numbers, or model numbers that tie back to your inventory records. Generic photos of "miscellaneous items" aren't as useful as specific documentation that matches your basis calculations. The cash flow modeling you mentioned is crucial - I've seen S-Corps get excited about the tax benefits and donate inventory they actually needed to sell to meet operating expenses. Always run a cash flow projection that accounts for the lost sales revenue versus the tax savings at the shareholder level.

This is definitely a tricky situation, but you're handling it well by being cautious! Based on what you've described, here are the key steps I'd recommend: 1. **Contact the employer first** - Call their HR or payroll department and explain that you received two W-2s with different EINs after their payroll system change. Ask them to verify if both forms are correct or if one needs to be amended. 2. **Verify the Statutory Employee classification** - Since this is different from last year, specifically ask if this was intentional or a mistake during the transition. This classification has significant tax implications. 3. **Check for double-counting** - Compare the combined wages from both W-2s against his final paystub of the year to make sure income isn't being counted twice. 4. **Don't file yet** - I'd hold off on submitting the return until you get clarification from the employer. It's much easier to fix this now than to deal with IRS notices later. The good news is that payroll system changes often cause these kinds of issues, and most employers are used to fixing them once they're made aware. Document everything when you call them - get names, dates, and reference numbers for any corrections they agree to make. You're absolutely right to be cautious here. Better to take a few extra days to sort this out than to potentially trigger an audit or have processing delays!

I just went through something very similar last month! My company switched from Paychex to Gusto mid-year and I ended up with two W-2s that looked almost identical except for the state tax boxes. Here's what I learned: The different EINs you mentioned are actually a huge red flag. When I called my employer about this, they initially told me "both are correct" but when I pressed them on why they needed different EINs for the same company, it turned out the new payroll system had accidentally pulled an old/inactive EIN from their records. I'd strongly recommend calling and asking to speak with whoever set up the new payroll system, not just general HR. Ask them specifically: "Why do these W-2s have different EINs if they're from the same employer?" and "Can you confirm the Statutory Employee box is correct since it wasn't checked last year?" In my case, they had to issue a corrected W-2c form that consolidated everything properly. It took about 10 days to get the corrected form, but it saved me from having to explain to the IRS why I apparently had two different employers with nearly identical company information. Don't let them brush you off with "it's fine because we switched systems" - that's not how tax reporting works. You deserve clear, accurate documentation, especially since this affects how your boyfriend's taxes are calculated.

As someone who works in tax compliance, I want to emphasize a few critical points that haven't been fully covered yet: First, timing matters significantly. You mentioned your son wants to transfer this next month - make sure he understands that large international transfers can take several days to process and may face additional scrutiny from both Thai and US banking authorities. Plan accordingly. Second, document EVERYTHING. Keep records of the relationship between you and your son, the gift letter, all transfer documentation, and any correspondence about the gift. The IRS may request this documentation years later during an audit. Third, consider the gift tax implications on your son's end in Thailand. While you won't owe US tax on receiving the gift, Thailand may have its own rules about large monetary gifts or transfers abroad that your son needs to comply with. Finally, given the substantial amount ($650,000), I'd strongly recommend getting a second opinion from another international tax professional even after you hire the first one. The peace of mind is worth the additional consultation fee when dealing with potential penalties that could reach tens of thousands of dollars for filing errors.

I want to add some perspective as someone who received a large foreign gift two years ago ($350k from my grandmother in the UK). The advice here is all solid, but I want to emphasize how important it is to get ahead of this process early. When I received my gift, I made the mistake of waiting until tax season to deal with Form 3520. By then, I was stressed and rushed, which led to some errors that required amendments. Start looking for that international tax professional NOW, not in March when everyone is swamped. Also, regarding your son in Thailand - have him get a letter from his bank confirming the source of the funds and that it's a legitimate transfer. Some US banks will want to see this to satisfy their anti-money laundering requirements. My UK bank provided something called a "source of funds declaration" that really helped smooth the process on the US side. One more thing - keep digital and physical copies of everything in multiple locations. I lost some paperwork in a computer crash and had to scramble to get duplicates from overseas, which was a nightmare. The IRS can ask for this documentation years later during audits, so treat it like you would any other important financial records. The good news is once you get through the reporting the first time, you'll know exactly what to expect if this ever happens again!

When I bought my house with seller financing last year, we structured it as an interest-only loan for 5 years with a balloon payment. This gave me lower monthly payments while I built up equity in another property I'm selling, and it gave the sellers predictable interest income without the tax complexity of receiving partial principal payments each year. Just make sure whatever you do is properly documented with correct amortization schedules and interest rates that are reasonable (too low and the IRS might impute interest). We used a real estate attorney to draft everything and it cost about $1200 but was worth every penny for the peace of mind.

One thing to keep in mind is that seller financing can also provide some negotiation leverage beyond just the tax benefits. Since the sellers are avoiding realtor commissions (typically 5-6% of the sale price), you might be able to negotiate a portion of those savings into a lower purchase price or better loan terms. Also, make sure you understand the due-on-sale clause implications if there's an existing mortgage on the property. If the sellers still owe money on the house, their lender could technically call the loan due when they sell, even with owner financing. Most lenders don't actively monitor this, but it's a risk worth discussing with your real estate attorney. The tax benefits you mentioned are real - the installment sale method can definitely help them manage their tax burden, especially if any of them are close to Medicare premium income thresholds. Just make sure everyone understands both the benefits and the additional paperwork requirements that come with seller financing.